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Barclays’ costly image reform bill sees profit tumble
by Dylan Lobo on Oct 30, 2013 at 08:00
Barclays profit has taken a hit as it counts the costs of the bill to transform its tarnished image, with steep losses in its investment banking arm also hurting earnings.
The bank, which incurred a hefty fine for Libor manipulation in 2012, suffered a 26% fall in profit in the third quarter as earnings fell from £1.9 billion in the corresponding period of 2012 to £1.39 billion.
Profit at its investment bank more than halved from £988 million to £463 million as chief executive Antony Jenkins bowed to public pressure to reduce the lender's exposure to casino-banking operations. This represented the lowest return for the division since the end of 2011 and was largely due to the fall in revenue in its currency, fixed income and commodities markets.
Barclays still has plenty of work to do on its project to revive its image, dubbed 'Transform', after admitted it was co-operating with regulators regarding the possible manipulation of currency markets 'covering a several year period'.
The latest probe is among a number of fresh scandals the bank has endured since the Libor fine.
These include investigations into the bank's role in the manipulation of Euribor and commodity futures markets, while the Financial Conduct Authority has warned the bank faces a £50 million for 'acting recklessly' in the deal with Qatari investors in 2008, which saved the bank from a government bailout.
Barclays expects the Transform programme to deliver 'significant' benefits by 2014, which has seen the group fork out £741 million so far this year.
Jenkins is positive on the evolution of Transform. '[There] is clear evidence of growing momentum in the delivery of Transform, including the significant and early reduction of risk-weighted assets in our 'Exit Quadrant' portfolio, and in cost control where our "cost to achieve" investments this year will generate significant benefits as soon as 2014,' Jenkins told the market.
The market response displayed a show of faith in Barclays with shares in the bank 4% higher at 237.6p at 10.45am.
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